Co-founder Alex Gourley says it’s been a fantastic change. He believes there are three main reasons many startups will follow them: economics, culture and environment, and the labor pool.

Economics

Software startups require less investment capital to start than ever. Thanks to mature open source projects and turnkey cloud services, the time and expertise needed to launch most startups is falling dramatically.

This means that fewer companies seek capital early in their lifecycle. Founders are more likely to attempt to bootstrap, and, even if they do want to raise capital, the institutional investors demand more pre-funding traction than ever. The path to startup success now begins with frugality.

The most significant overhead is the founders’ cost of living. San Francisco already had high rents in 2010 and they’ve gone up an incredible 50% in the three years since. In short, San Francisco property values are toxic for early-stage companies, and, as I will address next, the city fails to make up for it in other ways.

Culture and environment

San Francisco is an amazing, diverse city. It is unquestionably cool, and its nightlife and culture are commonly credited with the influx of tech workers and tech startups. But if you look at what startup founders and early employees actually do with their leisure time, it’s mostly cramming into a café while searching for an elusive power outlet, drinking good coffee, drinking good beer, reading a good book, or going on a nice hike.

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